After announcing the postponement of interest payments on its perpetual notes, NEW WORLD DEV (00017.HK)  +0.050 (+1.101%)    Short selling $11.47M; Ratio 18.132%   nosedived over 6% yesterday but managed a rebound of nearly 9% this morning.

Despite the negative market reaction, Morningstar noted that the delay in interest payments aligned with its expectations because of NEW WORLD DEV's ongoing liquidity constraints. The broker anticipated that the company would prioritize refinancing HKD87.5 billion in bank loans before July 2025.

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As of May 30, 60% of the loan refinancing had been committed by banks, and negotiations with other creditors are still ongoing, according to media reports. Morningstar considered the refinancing as achievable, though the banks may require higher interest rates and additional collateral, such as Victoria Dockside.

While believing that NEW WORLD DEV is likely to avoid default, Morningstar also stressed that the company's net debt ratio (55% as of December 2024, excluding perpetual debt) should be higher than most of its peers.

Although NEW WORLD DEV lacks a moat now, the broker has maintained most of its long-term forecasts and its fair value estimate of HKD4.4 per share unchanged. It viewed the company's stock price as reasonable but preferred property developers with healthier balance sheets and more stable dividend payments, such as HENDERSON LAND (00012.HK)  +1.050 (+4.516%)    Short selling $106.10M; Ratio 19.619%   .
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2025-06-05 16:25.)

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